England, US Approach Alimony Differently

From Boston Herald:

Q: I’m a citizen of England. Before I got married, I acquired a substantial amount of property through hard work and inheritance. I married an American woman. We jointly own a home on Nantucket in which we now live about half the year. We have other assets in the United States. The other half of the year we live in the United Kingdom.

Our 30-year marriage is at an end. The questions are: Should I file for divorce in Massachusetts or in England? Should I stop working and let the executive vice-president take over the company?

A: This column addresses only the alimony issues. Important tax issues will be covered next Sunday.

Both English and Massachusetts law requires the judges to make a complete and full divorce. As discussed in last Sunday’s column, both jurisdictions achieve half that goal by ordering a final division of property. The other half involves awarding alimony. Of course, if there were child-related issues — not mentioned by you — there would be additional factors.

In England, if you have enough assets to make a clean break, the judge will order you to pay a lump sum of “support” to your wife. That lump sum is determined by first deciding the recipient’s “reasonable needs.” About 2,000-some English judges, having found the payor’s earning capacity is also a marital asset, determined a lump sum by using a “Yardstick of Equality.” In 2008, the English appellate court started to push back against that “yardstick.” So that issue is in flux.

Once the annual payment is determined, the English judge will consider “The Duxbury calculations.” Those tables assume a 3.75 percent investment-rate-of-return plus a 3 percent annual increase in the capital. Because those rates are higher than the reality of the current market, not much, if any, weight is currently given to these tables.

Read more here.